Good news! Debt mutual funds witness Rs 100,903 cr net inflows in April

By: |
May 11, 2021 2:39 PM

After net outflows for two months in a row, Short Duration category witnessed net inflows of Rs 1,246.52 crore in April.

Banking & PSU funds again witnessed net outflows this month as a result of the new guidelines around valuations and fund exposure norms for AT1 bonds.

Having witnessed a net outflow of Rs 52,528.07 crore in March given it being a quarter end, debt-oriented categories of mutual funds received a healthy net inflow of Rs 100,903. 48 crore in April. As per industry experts, this is largely on expected lines as this trend is typically observed in April, which is after the end of the financial year.

Expectedly, Liquid Funds and Overnight Funds received significant amount of assets. This indicates that corporates and businesses would have chosen to park their excess short-term money in these funds, at the beginning of the new financial year.

“Besides, other funds at the shorter end of the curve (such as Money Market, Low Duration, Ultra Short Duration), too received good net positive flows during the month. This also indicates that investors continue to prefer fixed income funds at the shorter end of the curve, in line with the prevailing interest rate scenario, as well as categories with cleaner credit profiles such as Money Market and Short Duration,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, commenting on fixed income funds based on AMFI’s monthly data for April’21.

After net outflows for two months in a row, Short Duration category witnessed net inflows of Rs 1,246.52 crore in April. Similarly, Floater Funds also continued to receive net positive flows. In April, the category garnered Rs 3,351.68 crore of net assets. The limited probability of interest moving down significantly has benefited both these categories.

Banking & PSU funds again witnessed net outflows this month as a result of the new guidelines around valuations and fund exposure norms for AT1 bonds. That said, the amount of net outflow fell sharply to Rs 150.91 crore in April from net outflow of Rs 6,508.32 crore in March.

“Dynamic Bond Fund category witnessed the highest net outflows of Rs 2,103.01 crore, among debt-oriented categories, during the month. This was largely because, given the current interest rate regime, investors aren’t looking for greater duration exposure,” said Srivastava.

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